Corporate Results

For the year ended 31st December, 2009, the Company and its subsidiaries (the “Group”) recorded revenue from operations of approximately HK$21.04 million (2008: 22.72 million), representing a decline of 7.39% compared with last year.

The Group’s loss attributable to owners of the Company approximately HK$38.7 million (2008: loss of HK$66.24 million), an improvement of 41.58% from last year. The loss per share for the year ended 31st December, 2009 was 12.8 HK cents (2008: loss per share of 30.9 HK cents), an improvement of 58.58% over last year.

Dividend

No interim dividend was paid during the year and the Board did not recommend a final dividend.

Liquidity and Financial Resources

As at 31st December, 2009, the Group had cash and bank balances and deposits held at financial institutions amounting to HK$28 million (2008: HK$29.74 million). Fundamentally, the Group’s funding policy was to finance the business operations with internally net generated cash and bank facilities. As at 31st December, 2009, the Group had total borrowings of HK$24.70 million (2008: HK$22.71 million) of which HK$8.72 million (2008: HK$5.92 million) was payable within one year and the remaining was payable after one year and was fully secured. The Group’s borrowings were denominated in Hong Kong dollar and Japanese Yen.

Interest rates were in line with the best lending rates either at prime or based on the Hong Kong Interbank Offer Rate. The Group did not have any financial instruments used for hedging purpose.

Gearing Ratio and Current Ratio

The Group’s gearing ratio (total bank and other loans to shareholders’ equity) as at 31st December, 2009 increased to 8.93% (2008: 7.52%). The Group’s current ratio (current assets to current liabilities) as at 31st December, 2009 declined to 2.26 (2008: 3.54). On the whole, the financial position and liquidity of the Group were healthy.

Capital Structure

During the year, there was no change to the share capital of the Company. As at 31st December 2009, the total number of issued ordinary shares of the Company was 302,837,886 shares.

Disposal of Property and Pledge of Assets

During the year, the Group had disposed an investment property of a cinema (including part of G/F to 3/F), which was situated at Tung Fai Court, 2 Shui Che Kwun Street, Yuen Long, New Territories. The disposal was completed on 29th October, 2009 and the aggregate consideration amounted to HK$9.21 million.

At 31st December, 2009, the Group had pledged certain listed investments, bank deposits and certain properties with an aggregate carrying value of approximately HK$163 million (2008: HK$184.8 million) to banks and financial institutions for margin trading facilities, and other loan facilities to the Group to the extent of approximately HK$287.1 million (2008: HK$278.4 million).

Exposure on Foreign Exchange Fluctuations

The Group had no significant exposure to foreign fluctuation during the year.

Contingent Liabilities and Capital Commitments

Contingent Liabilities

As at 31st December, 2009, the Company is contingently liable for guarantee issued to a bank in respect of a mortgage loan granted to a subsidiary. The mortgage loan utilised by the subsidiary amounted to HK$18.9 million (2008: HK$17.6 million). The maximum amount the Company could be required to settle under the arrangement is HK$20,082,000 (2008: HK$21,257,000).

In the opinion of the directors, the fair value of the financial guarantee contract is insignificant. Accordingly, no value has been recognised in the consolidated financial statements.

Capital Commitments

At 31st December, 2009, the Group had no significant capital commitments (2008: Nil).

Material Acquisitions and Disposals of Subsidiaries and Associated Companies

On 9th December 2009, a shareholders’ agreement entered into among Mr. Lam Wing Kwan Ringo, Mr. Chan Kin Pong, Mr. Luo Jianguang, Smart Castle Limited, Far East Capital Management Company Limited (a wholly-owned subsidiary of the Company) and Orbit-Media Limited pursuant to which, inter alia, Far East Capital Management Company Limited shall (i) subscribe for a total 17,850 shares in the share capital of Orbit-Media Limited at a consideration of HK$1.75 million and (ii) provide Orbit-Media Limited with a shareholder’s loan in the amount of HK$2.45 million for working capital purpose, on and subject to the terms and conditions mentioned in the Shareholders’ Agreement.

Employees and Remuneration Policies

At 31st December, 2009, the Group had approximately 340 employees in Hong Kong and PRC (2008: 330 employees). The Group offers its employees competitive remuneration packages based on industry’s practices and performance of individual employee. Year-end discretionary bonus would be granted to reward and motivate those well-performed employees. The Group was adopted a share option scheme on 23rd May, 2005 and discretionary share options would be granted to reward and motivate those well performed employees. There were totaling 2.3 million (2008: 2.3 million) share options outstanding under the share option scheme as at 31st December, 2009.

Business Review and Prospects

Information Technology Holdings
Chinasoft International Limited (“Chinasoft”)

It was reported a loss attributable to owners of Chinasoft approximately RMB126.74 million for the year ended 31st December, 2009 (2008: profit of RMB63.34 million) representing a decline of approximately three times from that of last year due to the effect of non cash provisions for bad and doubtful debts, cost of option and exchange gain and loss. All these affect in a way that the net profit in financial statements for prior periods cannot directly reflect the actual profitability of the Chinasoft’s business operation. Professional investors may recognise that non-business factors contribute to the loss of Chinasoft’s final results and will not post adverse effects on its business operation and cash flow.

Chinasoft will snatch its potential merger and acquisition opportunities, and deploy the listing advantage to materialize a favorable comprehensive setting and continue to strive for its market shares in China and position itself a world-class leading enterprise in providing comprehensive software and information technology service.

Entertainment Holdings
Beijing Golden Music Resources Management Technology Co., Ltd. (“GMR”)

GMR supplies hotels, shopping centers, exclusive shops, restaurants, entertainments, beauty salons, etc. with high quality background music at a low price with copyright and plays a leading role in the background music service market and is also the initiator of the industry standards. GMR is the only supplier of integrated solutions of music programming, distant hosting service for clients, and new media solutions for the music industry in China. Cooperated with copyright administrations all over China, various industry associations, system integrators and content providers, GMR has served thousands of customers in more than ten provinces. For the year ended 31st December 2009, GMR achieves a turnover of HK$5.44 million (2008: HK$1.42 million) representing 2.83 times increase over last year and incurs a net loss of HK$18.2 million representing a decrease of 21.55% comparing with last year (2008: net loss of HK$23.2 million).

GMR will continue to maintain the advantages of its proprietary technology, copyright database, online control platform and services to make its professional background music services unique and valuable to our clients so as to enlarge industry area and market share, in order to become the leader of background music service supplier in China.

Aviation Holdings
Beijing Kailan Aviation Technology Co., Ltd. (“Beijing Kailan”)

During the year, Beijing Kailan has recorded a net profit of HK$6.15 million (2008: net profit HK$5.2 million) representing an improvement of 18.27% over that of 2008. Notwithstanding there was an improvement in profit in 2009, the demand for aero-related business was reduced in response to the global economic downturn.

With the gradual recovery of the international market, the continual rise of the domestic market in China and the opening of World Expo 2010 Shanghai in May, Beijing Aviation anticipates that its areorelated business will pick up progressively in 2010.

Industries
Jiangsu Bang Bang Silky Fashion Manufacturer Company Limited (“Jiangsu Bang Bang”)

For the year ended 31st December, 2009, Jiangsu Bang Bang reported a turnover of approximately HK$14.97 million (2008: HK$20.41 million) representing 26.65% decrease comparing with 2008 which was mainly due to the decline in weakening overseas market demand. It recorded a net loss of approximately HK$148,000 (2008: net loss of HK$342,000) was recorded representing an improvement of 56.73% comparing with 2008.

In response to the challenging market environment in 2010 for the textile industry, Jiangsu Bang Bang will reinforce internal management, strengthen cost control, enhance product quality and operating efficiency so as to improve its business in the coming year.

Outlook

The directors will persist to exploit potential investment opportunities in greater China in order to enhance the competitive advantage of the Group and generate better returns to the shareholders. The directors are confident that the Group’s business will recover gradually.

Event after the Reporting Period

On 22nd February 2010, River Joy Limited, a wholly-owned subsidiary of the Company entered into a provisional sale and purchase agreement with Federal Profit Company Limited, an independent third party, pursuant to which River Joy Limited agreed to dispose of the property situated at Flat C on 22nd Floor and car park space No. 26 on Level 5 of Tower 3 Tregunter, No. 14 Tregunter Path, Hong Kong, a residential property with a gross floor area of 3,001 sq. ft. at a consideration of HK$48,000,000. The disposal was expected to be completed on or before 31st May, 2010.

Duncan Chiu
Managing Director and Chief Executive Officer
Hong Kong, 26th April, 2010